EXCLUSIVE Tesla considering exporting Chinese-made electric vehicles to US sources – Reuters | CarTailz

SHANGHAI, Nov 11 (Reuters) – Tesla (TSLA.O) is considering exporting Chinese-made electric cars to the United States, two people with knowledge of the plan told Reuters, a reversal that would reflect the automaker’s deepening cost advantage its Shanghai plant and slower demand from Chinese consumers.

Tesla has been investigating whether parts made by its China-based suppliers comply with local regulations in North America, and if so, it could have China-made Model Y and Model 3 cars on sale as early as next year deliver there, people said , who declined to be named as the matter is private.

That could also open a channel for exports to Canada, one of the people said.

Tesla did not immediately respond to a request for comment.

Tesla’s Shanghai Gigafactory has the capacity to produce 1.1 million electric vehicles a year after a modernization earlier this year, making it Tesla’s most productive manufacturing hub.

The Shanghai plant manufactures Model 3 sedans and Model Y crossovers for sale in China and for export to markets such as Europe, Australia and Southeast Asia.

Until recently, Tesla had sold or shipped every vehicle it could produce in Shanghai for export, but inventories rose at an all-time high in October, according to data from brokerage firm CMBI.

In addition, factors such as a cheaper yuan against the US dollar, lower commodity prices in China, and the rise in Tesla and new car prices in the United States have combined to mean that exports from China to the United States may be cost-competitive, people said with knowledge of said plans.

The plan, if implemented, could create new complexities for US buyers. Under the terms of a new electric vehicle subsidy and production stimulus plan signed into law by US President Joe Biden, the stimulus available to an individual vehicle could vary depending on whether it was imported.

It could also be politically controversial. Tesla is widely credited as one of the main beneficiaries of the Biden administration’s Inflation Reduction Act (IRA), which is designed to offer rebates of up to $7,500 on purchases as part of a law designed to encourage automakers to reduce their reliance on China granted by electric vehicles.

Tesla Chief Financial Officer Zachary Kirkhorn told investors last month the automaker is “very well positioned to get a significant share” of the incentives being offered under the IRA for electric vehicles and batteries for energy storage.

So far, Tesla’s strategy has been to build the cars it sells in North America at its plants in Fremont, California, and Austin, Texas.

The California plant, Tesla’s first, produces the Model S, Model 3 sedans, and Model X and Model Y crossovers. The Texas plant, which opened earlier this year, makes the Model Y and will produce Tesla’s upcoming Cybertruck .

Tesla is also ramping up production at a plant it opened in Berlin earlier this year. Production from the Berlin plant will reduce the need for some exports from China, one of the sources said.

At the same time, the price differential between Tesla cars sold in China and the United States has widened, reflecting both higher US prices and new discounts in China.

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In China, where CMBI analysts have warned of an impending “price war,” Tesla slashed entry-level prices for its Model 3 and Model Y in China by as much as 9% over the past month.

On Monday, it offered an additional discount for buyers who take delivery this month and buy insurance with one of Tesla’s partners.

Tesla sells the Model Y in China for the equivalent of $49,344 compared to the US price of $65,990. Chinese-made cars are subject to a US tariff of 27.5%, while light trucks are subject to a 25% tariff.

China, the world’s largest car market, imposes a 15% tariff on imported vehicles.

In 2018, before Tesla’s Shanghai plant went live, Chief Executive Elon Musk had asked then-President Donald Trump to increase tariffs on cars imported into the United States from China to “get a fair outcome.” to achieve, in which both sides were equal and “equal moderate” tariffs.

Tesla wouldn’t be the first US automaker to ship Chinese-made vehicles to the United States. General Motors (GM.N) has imported the Buick Envision SUV and unsuccessfully requested an exemption from the 25% US tariffs imposed by the Trump administration.

($1 = 7.2511 Chinese Renminbi Yuan)

Reporting by Zhang Yan, Brenda Goh; writing by Kevin Krolicki; Edited by Anna Driver

Our standards: The Thomson Reuters Trust Principles.

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